I'd give up the phone before I'd give up the Bloomberg," says an East Coast fixed-income portfolio manager, who maintains that the Bloomberg system - which is on 265,000 professional investor and broker desktops - is the only place to go for fixed-income analytics. While that sentiment expresses the fierce loyalty buy-side customers have toward the ubiquitous global-information system, it raises a question: Why isn't Bloomberg the leading fixed-income trading system?
When buy-side managers need to buy or sell fixed-income securities, they should naturally turn to their Bloomberg screens. Since the system is on every major buy- and sell-side desktop, it should attract more liquidity than any other electronic bond-trading system. But buy-side managers don't turn to Bloomberg. TradeWeb, a multiple dealer-owned consortium, is the system fixed-income managers turn to most for U.S. Treasury bonds, and MarketAxess is the consortium-owned platform they go to for corporate bonds.
Still, many buy-side portfolio managers are hoping that Bloomberg will enhance its treasury-bond and corporate-bond trading services. Already heavy users of Bloomberg's fixed-income analytics, buy-side managers want more competition in the bond-trading platform market, and they don't want to pay the fees incurred as a result of trading on TradeWeb.
At the center of the issue are three questions: First, can Bloomberg attract more liquidity from buy- and sell-side fixed-income traders given that the consortium-based systems are easy to use and already have more liquidity? Second, is the sell side willing to support fixed-income market-making on Bloomberg, or is it in their economic interest to favor the platforms they own? And third, will the buy side utilize another platform if they are already trading on two others?
Many sources say that Bloomberg's biggest advantage is its huge footprint, not to mention its fixed-income analytics and comprehensive databases. "Because it's the platform of choice for securities data as well as [instant] messaging, it just sits on everyone's desktop," says the East Coast fixed-income portfolio manager, who requested anonymity.
"Bloomberg is still the giant on the block when it comes to securities information and analytic information on securities. It's amazing that they haven't been able to parlay that into a trading platform," he adds.
According to a Bloomberg spokeswoman, "In Treasuries, usage of BBT [Bloomberg BondTrader] is dramatically growing. It's four times the amount it was last year." Though she declined a request for an interview for this article, the spokeswoman did say that "If you aggregate between BondTrader and every single-dealer page, we have higher volume than any other [e-bond trading] system out there."
Thomas Girard, a managing director and senior portfolio manager with investment management firm Weiss, Peck & Greer in New York, notes that nearly everybody in the industry has a Bloomberg system on their desks. "You would think that having an electronic-trading platform would have been a natural for them," says Girard, who uses Bloomberg for analytics but mainly trades Treasury bonds on TradeWeb. "It appears to me that Bloomberg is trying to play catch-up on that front," he adds.
Why isn't Bloomberg in a leading position in the fixed-income trading space? Girard speculates that Bloomberg previously focused on providing news, market information and analytics, as opposed to transactions. As a result, "TradeWeb got in front of them and got the sponsorship of the big dealers, and now they're entrenched," says Girard.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio